Designing and Assessing Risk-Sharing Models for Federal Student Aid

Author

Abstract

Nicholas Hillman proposes a risk-sharing system that uses measures of student loan default and non-repayment, each adjusted by the percentage of students at a school who borrow. Institutions would be asked to repay between 5 and 15 percent of the balance of loans received if they had results far outside the norm of similar schools. His paper also provides a detailed look at the characteristics of the institutions that would make risk​-sharing payments under his system, versus other models suggested by members of Congress.